Correlation Between Morgan Stanley and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Hwa Fong at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Morgan Stanley and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Direct and Hwa Fong Rubber, you can compare the effects of market volatilities on Morgan Stanley and Hwa Fong and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Morgan Stanley with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Hwa Fong.
Diversification Opportunities for Morgan Stanley and Hwa Fong
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morgan and Hwa is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Hwa Fong Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwa Fong Rubber and Morgan Stanley is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Morgan Stanley Direct are associated (or correlated) with Hwa Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwa Fong Rubber has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Hwa Fong go up and down completely randomly.
Pair Corralation between Morgan Stanley and Hwa Fong
Given the investment horizon of 90 days Morgan Stanley is expected to generate 11.05 times less return on investment than Hwa Fong. In addition to that, Morgan Stanley is 1.36 times more volatile than Hwa Fong Rubber. It trades about 0.01 of its total potential returns per unit of risk. Hwa Fong Rubber is currently generating about 0.09 per unit of volatility. If you would invest 1,815 in Hwa Fong Rubber on December 27, 2024 and sell it today you would earn a total of 65.00 from holding Hwa Fong Rubber or generate 3.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 91.8% |
Values | Daily Returns |
Morgan Stanley Direct vs. Hwa Fong Rubber
Performance |
Timeline |
Morgan Stanley Direct |
Hwa Fong Rubber |
Morgan Stanley and Hwa Fong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Hwa Fong
The main advantage of trading using opposite Morgan Stanley and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Hwa Fong can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hwa Fong will offset losses from the drop in Hwa Fong's long position.Morgan Stanley vs. KVH Industries | Morgan Stanley vs. Western Copper and | Morgan Stanley vs. Olympic Steel | Morgan Stanley vs. Radcom |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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